Cement woes

I’ve been  planning  to glue together a fence around my compost pit,  but being  centavo-conscious, I worry about the cost of cement. After reading  media accounts of the heated conflict between cement importers and cement manufacturers-cum-importers, I better let them do the worrying, with the hope that the resolution they arrive at will be for the good of us consumers.

The ill-feelings began when the Department of Trade and Industry’s Bureau of Product Standard issued Administrative Order 17-05  mandating cement importers to secure Import Commodity Clearance (ICC). Local cement manufacturers operating integrated cement plants in the country, and who are allowed to import cement from foreign countries, however, are exempted from securing ICC. The ICC requirement is on top of the PS (Philippine Standard)  mark that is mandatory for all cement imports. 

The ICC is meant to ensure that only high-quality cement gets into the local market. Trade Secretary Ramon Lopez gave his stamp of approval of the administrative measure, saying it is  fair, legitimate, and non-discriminatory.

The local cement importers, considering  themselves  as “small players,” raised  a howl, saying that they and the manufacturers-cum-importers have the same foreign suppliers, hence the quality of imported cement is the same across the board.  

The order, according to local importers, could delay the Duterte administration’s embarking on an aggressive P8-trillion Build, Build, Build program aimed at ushering in the “golden age of infrastructure.” With no less than 75 big-ticket infrastructure programs up for implementation until 2022, cement manufacturers and importers would have to work double time to meet deadlines.

Furthermore,  the demand for cement in construction activities has grown higher. Some 600 million bags of cement are sold annually by local manufacturers, and an additional 120 million bags are imported by both manufacturers-importers and pure importers.

A ranking official of DTI is being vilified for authoring  the order, and for “doing his job”.  A source told me that the official “is being assailed for taking a bold and decisive step to protect the domestic market from dumping of imported quality cement and steel bars.”

“It  is a simple product standard testing process that was added as a post-import requirement to ensure at all times standard compliant cement products for the protection of the consumers.”

But local cement importers view the order differently. They argue that the ICC requirement puts them at a disadvantage as opposed to local cement manufacturers-importers  who are not covered by AO 17-05.

The DTI official says, “It is common knowledge that more stringent rules govern cement production, including laboratory tests to guarantee that only standard complaint products reach the market.

“Cement production is a capital inventive venture, and it would be foolhardy for these manufacturers to put their businesses and corporate reputation in serious jeopardy by undercutting quality regulations.”

With the Duterte administration’s  Build, Build, Build infrastructure program which would definitely trigger a construction boom in the country it will not  be far-fetched  to speculate the influx of imported cement, including substandard ones that would potentially undermine the safety and integrity of government projects, says a DTI source.

Cement manufacturers-importers, says DTI, are not required to secure an ICC because they have been classified as “low-risk,”  and  are therefore likely to ensure product quality since manufacturers of  “branded” or recognized cement products would not risk their companies’ reputation  with shoddy products.  It is possible, the DTI says, that some importers  may not be  able to vouch  for the quality of cement they supply.

Word has  it that this early, incredibly large volumes of mislabeled, substandard  cement are already stashed in underground warehouses across the country.

“It is extremely crucial, therefore, that our regulators should enforce rigid rules to ban the entry of low quality cement into the local market.” If profit-driven importers can’t even abide by simple business requirements  like the ICC, they have no right doing business in this country.”

Secretary Lopez has said that importers may not account for the quality and integrity  of the products they bring into the country.

Philippine cement importers get their supplies from a number of Asian countries, notably Vietnam, Indonesia,  Thailand, South Korea and China.

Reports also state that Vietnam alone is host to 58 integrated cement factories, compared with the Philippines’ 18 plants.

Allegations that cement prices rose to P300 in 2015 is a big lie to make it appear that unseen hands control the prices of construction materials, says DTI. 

The opposition have filed three  Temporary Restraining  Orders to stop  the implementation of AO 1705. Two  have been withdrawn or dismissed and the third is  pending.

According to material I received from a public relations man,  cement importers feel that the DTI order runs counter to President Duterte’s promise to  reduce red tape in government and to facilitate  the process of doing business in the country; it is arbitrary and capricious, having been issued without any public consultation; it constitutes material and substantial infringement of the right to import; it violates the 1987 Constitution prohibiting unfair competition, and  violates the Philippine treaty obligations specifically  the ASEAN Trade in Goods agreement and World Trade Organization (WTO) agreement of 1994 as it constitutes a non-tariff barrier to free trade.

The cement importers are apprehensive that DTI may be unduly protecting the interests of the big cement manufacturers-importers at their expense. The net effect of this would be to drive them out of business and  lead to higher prices of cement in the domestic market. 

As of this writing, the case against AO 17-05 is being attended by the Solicitor General for and on  behalf of DTI.

The sooner the conflict is resolved, the better for us consumers who have to pay whatever price is  dictated by cement traders. 

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Entrepreneur Romy David writes that in support  of the rehabilitation efforts in  war-damaged Marawi City, he suggests the drilling of water wells  in shallow  water tables to provide water for the beleaguered victims, residents, refugees and  soldiers fighting to cleanse the city of  merciless,  godless Mautes.  He says a basic well-drilling machine will cost no more than P500,000.   The Department of Social  Welfare and  Development, Local Government Units, , Armed Forces of  the Philippines  and  Department of Public Works PWH should have such  equipment in their inventory ready to be deployed  to provide relief in emergency situations.    

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